Employment Compensation Awards to Increase

Employers and employees should take note of changes to the potential compensation awards that may be made at the Employment Tribunal and in certain other employment situations.

The Employment Rights (Increase of Limits) Order 2014 has been published and laid before Parliament. The changes to compensation limits will come into force from 6 April 2014.

Through the Order changes have been made to Trade Union and Labour Relations (Consolidation) Act 1992, (“the 1992 Act”) and to the Employment Rights Act 1996, (“the 1996 Act”)

What Are the Main Changes to Compensation Limits?

The most prominent changes relate to the maximum compensation that can be made for unfair dismissal, now £76,574, and the limit on the amount of a week’s pay for the purposes of calculating amounts such as redundancy payments and unfair dismissal awards, now £464. However a number of other increases have also been made. The specific changes are as follows:

1. Section 145E(3) of the 1992 Act: the amount of award for unlawful inducement relating to trade union membership or activities, or for unlawful inducement relating to collective bargaining increases from £3,600 to £3,715.

2. Section 156(1) of the 1992 Act: the minimum amount of basic award of compensation where dismissal is unfair by virtue of sections 152(1) or 153 of the 1992 Act increases from £5,500 to £5,676.

3. Section 176(6A) of the 1992 Act: the minimum amount of compensation where individual excluded or expelled from union in contravention of section 174 of the 1992 Act and not admitted or re-admitted by date of tribunal application increases from £8,400 to £8,669.

4. Section 31(1) of the 1996 Act: the limit on the amount of guarantee payment payable to an employee in respect of any day increases from £24.20 to £25.00.

5. Section 120(1) of the 1996 Act: the minimum amount of basic award of compensation where dismissal is unfair by virtue of sections 100(1)(a) and (b), 101A(d), 102(1) or 103 of the 1996 Act increases from £5,500 to £5,676.

6. Section 124(1) of the 1996 Act: the limit on the amount of compensatory award for unfair dismissal increases from £74,200 to £76,574.

7. Paragraphs (a) and (b) of section 186(1) of the 1996 Act: the limit on amount in respect of any one week payable to an employee in respect of a debt to which Part XII of the 1996 Act applies and which is referable to a period of time increases from £450 to £464.

8. Section 227(1) of the 1996 Act: the maximum amount of “a week’s pay” for the purpose of calculating a redundancy payment or for various awards including the basic or additional award of compensation for unfair dismissal increases £450 to £464.

Comment

It should be noted that the relevant compensation limits that apply relate to the timing of the event, either before or after 6 April 2014, that gives rise to the compensation and not the date compensation is awarded. For specialist employment advice please contact Aneil Balgobin via e-mail ABalgobin@rollingsons.co.uk or by telephone on 0207 611 4848.